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Tuesday, August 23, 2011

Today I am going to give my views on why the Brand Anna has seen such a meteoric rise. I have tried to relate this meteoric rise to branding theories that we study in marketing classes in MBA.

To me Brand Anna is a brand extension of Brand Mahatma Gandhi – The physical similarities between the two (the topi, the white dress, the physical features etc), the similarities in their core promises (a better future based on value systems), the similarities in their approach (fasting indefinitely, non violence, superior and unconquerable value systems etc)- all these have made us relate at a personal level to the core meaning of Brand Anna, trust the value proposition of Brand Anna and associate with it in ways that reminds us of the stories of freedom struggle that Mahatma Gandhi lead.

“A brand should strive to own a word in the mind of the consumer”. If you want to build a brand you must focus your branding efforts on owning a word in the prospect’s mind -there are many examples - RIN, NIRMA, FEVICOL, INFOSYS all own a word that connotes something to us as consumers. In this case “Anna” is the word that has got etched into our mind. Even though Anna means elder brother in India– today, the word Anna does not get the image of elder brother in our minds –it is the image of Anna Hazare that comes to us when we hear the word Anna. And we relate to brand Anna based on our interpretation of what he stands for.

“The crucial ingredient in the success of any brand is its claim to authenticity” – If Anna Hazare had not been there and we had the same core team except him (i.e. Kiran Bedi, Prashant Bhushan, Arvind Kejriwal, Santosh Hegde etc) and the same Lokpal bill– this movement would have gone nowhere. There is something in Anna Hazare that has made this movement what it is today. Anna Hazare’s credentials as a Gandhian and his past record are his claim to authenticity that the consumers of this brand trust.

“The birth of a brand is achieved with publicity, not advertising” – this is a golden rule for creating a brand. What the Anna team has achieved without spending any amount in terms of publicity is something that can clearly be a benchmark for any marketing campaign anywhere in the world. Now beyond media, the brand is being disseminated by the brand followers through events like marches all across India, and using “branded” items like the Gandhian topis with “I am Anna”slogan.

“The essence of branding is finding a compelling value proposition, something that differentiates it from the rest” –Team Anna has caught the imagination of people as they have been able to create a compelling product (the Lokpal Bill) that meets a latent need (freedom from corruption) of the common man. This latent need of “freedom from corruption” has been there for long – but has been ignored by the political class – and this is the gap that Team Anna has filled with the Lokpal bill. This emotional connect with the brand followers has been so strong that any smear campaign against it (like Anna’s arrest) would only bounce back.

“A brand becomes stronger when you narrow its focus” –India may have many issues that needs to be resolved – but this campaign is completely focussed on one issue - anti-corruption- if they had fought on a broader platform – then we as consumers may not be able to relate as clearly to it.

Needless to say that Brand Anna is every politician’s dream. All politicians try to create a brand around themselves (think Rahul Gandhi) –but they lack credibility as their promise is not supported by performance (as I write this blog – I understand that Rahul Gandhi is hiding in rural Maharashtra). They differentiate themselves through physical aspects like white cotton dress, security guards, long chain of powerful cars, lots of people welcoming them with garlands etc – but over time these differentiators need to be backed by a core product (in this case delivery of something good for the people) - as they do not deliver, over time, the market understands the hollowness of these political brands. Due to this non performance, there is currently a commoditization of political brands in India and only few people (like Manmohan Singh, Narendra Modi) are able to rise above the clutter.

Brand Anna has connected so well at an emotional level (instead of physical level) that it’s followers are willing to bear extreme physical inconvenience just to connect and contribute.

Saturday, August 13, 2011

My last blog on the economy written on June 3rd started with lines - “Just like the sea which seems calm at the surface but has massive amount of energy boiling inside it, I am seeing business as usual on the outside but large amount of chaos beneath this calmness.” As I wrote those lines, I was sensing trouble ahead – but I did not expect that it will erupt so soon. Last fortnight - the chaos finally surfaced – just like a volcano erupting, all over the globe, the markets turned extremely volatile.

Even as this was happening – I see experts in CNBC calling the situation “temporary” and urging people to invest in mutual funds and equity as the Indian markets are attractively priced at around 17000.

I do not believe this is a temporary situation. Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University, and former chief economist at the IMF, has presented a very apt analogy – he says, “for instance, if you have pneumonia but you only think it's a very severe cold - you go on a completely wrong medication which instead of curing your disease further alleviates your woes. In a nutshell, this is exactly what happened with the developed world. They misjudged the real problem. Governments and central banks used the wrong medicines. They tried to treat a debt-problem with more debt. No wonder the health of the economy became bad to worse.”

The current Fed decision to keep the interest rates in US to near zero levels till 2013 is a similar decision. This is aimed at encouraging people to leverage up, with the knowledge that their borrowing costs will likely be very low for a long period of time. Fed expects the people to take risks by investing in equity, business etc and this will hopefully keep the US economy growing.

In the past two decades, the developed economies have gone through a massive credit expansionary phase. People were living off credit (future income), assuming that the future will be brighter than the present – appreciation in real estate fuelled this feeling of wellness – however, the rise of China and India and the resulting slowing of western economies changed the situation –the future today does not look brighter than the present for the western economies (in India and China the future looks brighter than the present) – those who borrowed and leveraged highly could not repay – and from individuals the virus has spread to countries – today we have countries like Greece, Portugal, Ireland etc which cannot pay their debts – and that is bringing down the Euro zone.

I believe that the recent downgrade of the US debt is just a starting point - and there is more to come – may not be in the form of downgrades by rating firms – it may be in the form of wild swings in the bond market, series of defaults, financial repression measures and not to mention, inflation. I expect much more severe turmoil in the months ahead. The world economy is likely to experience an extended period of contraction and deleveraging.

India is not safe too and we are one of the countries identified by economists where there is a risk of rating downgrade.

In these times of uncertainty, I believe there will be opportunities to invest – I suppose Warren Buffet is investing heavily right now - however, for ordinary people, these are times when one must be careful – it is better to be safe than sorry.

In these times, I advocate investing in Gold ETF’s –I have been advocating this for the past one year now and I stick to my recommendations. Gold has given a 30% return in the last 12 months and there is more to come – so even if the prices of gold looks high- enter in dips (there are dips every fortnight) and wait patiently – I expect 15-20% returns in the next 12 months.